14. Deciding Whether to Carry Part of a Loan

A: I heard that the potential buyer is interested in me carrying part of a loan for him.

B: Carrying part of a loan can be a good or a bad thing, depending on the circumstances.

A: What would be an advantage of me carrying a note on the house?

B: If you don't need the money right away, you can earn a fairly good interest rate.

A: Why does my buyer want me to carry part of his loan?

B: In this economy, buyers sometimes have trouble getting a loan even when they have good credit.

A: What are the risks to me?

B: The risk is that the market could drop drastically and the owner would walk away.

A: How long will I need to commit to financing this loan?

B: You need to make an agreement with the buyer as to how long you will carry this note.

A: My potential buyer has asked me to carry part of his loan.

B: The decision to carry part of a loan might be advantageous to you or problematic.

A: Why would I ever want to carry a note on a house?

B: It is a type of investment that can offer a fairly steady return over a set period of time.

A: Why is my buyer requesting that I carry part of his loan?

B: Oftentimes buyers are well able to afford the home but unable to qualify for a loan.

A: Are there any risks in carrying a second mortgage?

B: You are basically betting on the fact that the home is not going to drastically fall in price. This could leave you with a house that is not worth much.

A: Will I be financing this loan for a set period of time?

B: That is entirely up to you and the buyer.

A: If the purchaser of your home wants you to carry part of the loan, is that good?

B: Carrying a loan could be good or bad for you as a seller.

A: Why would it be a good thing to carry a note on my own house?

B: For investors who can afford to have their money tied up, it can offer a fairly nice return.

A: What advantage is my buyer looking for in having me carry him on paper?

B: We are seeing more and more buyers who are not able to qualify for a loan and are able to take out a second mortgage with the owner.

A: Can I lose my money if I carry a second mortgage?

B: It is an investment and carries some risks. You are counting on the housing market to not go into a tailspin.

A: Is there a certain amount of time that I will be carrying this loan?

B: The buyer and seller set the year for the loan to come due.